Baylor Scott & White Health Will Be the State’s Largest
Not-for-Profit Health System

December 14, 2012 05:00 PM Eastern Time

DALLAS & TEMPLE, Texas--(BUSINESS WIRE)--The boards of Baylor Health Care System and Scott & White Healthcare
have approved the signing of an agreement of intent to combine the
strengths of their two health systems to create a $7.7 billion
organization with the vision and resources to offer its patients
continued exceptional care while creating a model system for an industry
undergoing fundamental transformation.

“Both
health systems are well-organized, well-run, best-in-class
organizations. We can learn from each other, and I think this only
benefits the patients we serve by allowing us to deliver better quality
care and increased access to care.”

The alliance reflects a vision by leaders from two of the nation's
preeminent health systems to create a new health system engineered to
meet the demands of health care reform, the changing needs of patients
and payers and the extraordinary advances in clinical care.

The new system, named Baylor Scott & White Health, will include the
organizations’ combined 42 hospitals, more than 350 patient care sites,
more than 4,000 active physicians, 34,000 employees and the Scott &
White Health Plan. It would be the largest not-for-profit health system
in Texas and one of the largest in the United States. It would be
governed by a single board with equal representation from both founding
members.

With approval of the agreement of intent, the organizations have entered
a period of exclusive negotiations and due diligence. The next stage in
the transaction -- a definitive agreement -- is anticipated to be
complete in 2013.

“Baylor has a century-long tradition of quality, innovation and service.
And in this time of great change in the health care industry, Baylor is
looking forward and preparing to once again lead by joining forces with
Scott & White to create this new model of care,” says Joel Allison,
president and CEO, Baylor Health Care System. “Scott & White is a
perfect partner for us as it is nationally known for its high-quality,
efficient care. Our proposed new organization reflects many months of
discussion between our two like-minded systems on how we could work
together to continue to meet the needs of the communities we serve in
this dramatically changing environment. The new organization will
continue to honor and carry forward Baylor’s 100-plus-year legacy as a
Christian ministry of healing.”

Because of industry changes, the number of hospital partnerships,
mergers, joint ventures and other arrangements designed to bring
like-minded health systems together is growing rapidly. Since 2008,
there have been 274 mergers and acquisition transactions affecting 439
hospitals, up nearly 22% over the previous four-year span.

In this new era, health systems must be prepared for declining
reimbursement, high levels of information management, an increasing
demand for primary care services and “population health management” to
advance the wellness of large groups of patients and keep them out of
the hospital.

"Our new organization will not only prepare us for health care reform
but will help drive and shape what health care delivery in this country
will become,” says Robert Pryor, MD, president and CEO, Scott & White
Healthcare. “Scott & White has been recognized as a national leader for
our strong physician-led population health model. Our shared vision with
Baylor is to build upon our unique approach and create an innovative
health care delivery model enhanced by medical education and research.”

Both organizations are affiliated with Texas A&M Health Sciences Center
and have extensive investments in medical education and research. Baylor
Scott & White Health will have the ability to expand training
opportunities for the next generation of health care professionals by
integrating education programs at both organizations.

The details of the agreement of intent include:

Unified Board: A unified board of trustees will be comprised of
14 individuals with an equal number of representatives from each
institution. Drayton McLane, Jr., the chair of the Scott & White board
of trustees, will serve as chair of the new organization’s board. Jim
Turner, the chair of the Baylor Health Care System board of trustees,
will serve as chair-elect of the new organization’s board.

Leadership: The new organization will be led by a single
executive leadership team. Joel Allison will serve as chief executive
officer of the new company. Dr. Robert Pryor will also serve as
president and chief operating officer of the new organization.

Operations: The new system will have two operating divisions,
which will consolidate over time. The Scott & White division will be
headquartered in Temple, and the Baylor division will be headquartered
in Dallas.

Brands: The new organization will be called Baylor Scott &
White Health. Both Baylor and Scott &White will retain their
individual brand names.

Foundations: The foundations will remain separate.

Medical Staffs: The medical staffs will remain independent.

“This partnership is the right thing for Baylor. It’s the right thing
for Scott & White. And, it’s the right thing for our communities,” said
Drayton McLane, Jr. chair of the Scott & White board of trustees. “Both
health systems are well-organized, well-run, best-in-class
organizations. We can learn from each other, and I think this only
benefits the patients we serve by allowing us to deliver better quality
care and increased access to care.”

For patients, the new organization will ultimately mean:

Greater, more convenient access to high-quality care through an
extensive network of physicians, advanced practice professionals,
medical centers and hospitals throughout North and Central Texas.

Increased coordination of patient care.

Improved patient outcomes, by combining the expertise of primary care
physicians, medical specialists and adopting the best practices of
both organizations.

The ability to attract, retain and train the very best national and
international talent.

Greater access to world-class primary and pediatric care and centers
of excellence in cardiology, oncology, transplant, rehabilitative
medicine and more.

“Together, our two health systems will cover two geographically diverse
areas that are nearly contiguous and highly complementary,” said Jim
Turner, chair of the Baylor Health Care System board of trustees. “We
strongly believe our neighboring geographies will allow us to be
well-positioned to lead the transformation of health care in Texas and
beyond.”

Baylor Health Care System is a not-for-profit, faith-based supporting
organization providing services to a network of acute care hospitals and
related health care entities that provide patient care, medical
education, research and community service. Baylor recorded more than 2.8
million patient encounters, $4 billion in total operating revenue, $5.2
billion in total assets and $502 million in community benefit in fiscal
year 2011 (as reported to the Texas Department of State Health
Services). Baylor’s network of more than 300 access points includes 30
owned/operated/ ventured/affiliated hospitals; joint ventured ambulatory
surgical centers; satellite outpatient locations; senior centers and
more than 180 HealthTexas Provider Network physician clinics. For more
information, visit www.baylorhealth.com.

About Scott & White Healthcare

Scott & White Healthcare is a non-profit collaborative health care
system established in 1897 in Temple, Texas. Among the leading health
systems encompassing one of the nation's largest multi-specialty group
practices, Scott & White provides personalized, comprehensive health
care enhanced by medical education and research. Scott & White
Healthcare includes 12 hospital sites with two additional announced
facilities, and 178 clinics at more than 65 clinic locations throughout
Central Texas providing adult and pediatric care in 46 medical
specialties. Integrated, high-quality care is delivered by a dedicated
staff of more than 14,000 (including 1,000 employed physicians and
scientists and more than 300 advanced practice providers). For more
information, visit www.sw.org.